Correlation Between Thomson Reuters and Maximus

Can any of the company-specific risk be diversified away by investing in both Thomson Reuters and Maximus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thomson Reuters and Maximus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thomson Reuters Corp and Maximus, you can compare the effects of market volatilities on Thomson Reuters and Maximus and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thomson Reuters with a short position of Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Maximus.

Diversification Opportunities for Thomson Reuters and Maximus

-0.8

Correlation Coefficient

Thomson Reuters  Maximus

Pay attention - limited upside

The 3 months correlation between Thomson and Maximus is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters Corp and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Thomson Reuters is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thomson Reuters Corp are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Thomson Reuters i.e., Thomson Reuters and Maximus go up and down completely randomly.

Pair Corralation between Thomson Reuters and Maximus

Considering the 90-day investment horizon Thomson Reuters Corp is expected to generate 0.75 times more return on investment than Maximus. However, Thomson Reuters Corp is 1.34 times less risky than Maximus. It trades about 0.13 of its potential returns per unit of risk. Maximus is currently generating about -0.1 per unit of risk. If you would invest  16,203  in Thomson Reuters Corp on November 29, 2024 and sell it today you would earn a total of  1,485  from holding Thomson Reuters Corp or generate 9.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Thomson Reuters Corp  vs.  Maximus

Thomson Reuters Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thomson Reuters Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Thomson Reuters may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Thomson Reuters and Maximus

The main advantage of trading using opposite Thomson Reuters and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomson Reuters position performs unexpectedly, Maximus can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Maximus will offset losses from the drop in Maximus' long position.

The idea behind Thomson Reuters Corp and Maximus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.